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Emerging Tech Trends

02/27/2004 12:00 am EST


Bambi Francisco Roizen


What are the top future drivers for technology demand? Internet expert Bambi Francisco, who writes the weekly NetStocks and daily NetSense columns for CBS MarketWatch discusses the top emerging technologies from VoIP to RFID, and the best stocks to play these trends.

"The declining value in the US dollar has been a predominant driver of sales growth for many tech companies over the last couple of years, leaving many investors to ask the perennial question: What will drive corporate demand for technology, and is it this year? According to research outfit Precursor, tech growth won't be driven by breakout technologies and product cycles as it had been in prior years. But the research outfit recently highlighted the emerging technologies to watch for and the companies that may benefit.

"The No. 1 emerging technology is 10 Gigabit Ethernet: This is a transmission technology based on Ethernet frame format and protocol used in networks. Demand will be driven by an increase in inter-server traffic and should be adopted by telecom carriers and businesses. The winners in this category may be Foundry Networks (FDRY NASDAQ), Extreme Networks (EXTR NASDAQ), and F5 Networks (FFIV NASDAQ).

"The No. 2 trend is VoIP, or Voice over Internet Protocol. This technology allows people to make voice calls over existing equipment that carries data while maintaining their current phone numbers. This technology essentially changes 'generic voice services into a software application', wroteJaime Roca, who is part of the technology research team at Precursor.

"The adoption of VoIP should bode well for companies such as Microsoft (MSFT NASDAQ) and Yahoo (YHOO NASDAQ), Comcast (CMCSK NASDAQ), Cox Communications (COX NYSE), Cablevision (CVC NYSE), and Time Warner (TWX NYSE), according to Roca. The VoIP trend should also present opportunities for companies that already run large communication networks for corporations. They should see increased demand from large corporations migrating to VoIP. The winners in this category are Nortel Networks (NT NYSE), Avaya (AV NYSE), and 3Com (COMS NASDAQ).

"Broadband wireless technology will remain in demand in 2004, according to Roca. The need for high-speed wireless connections should help communications-equipment provider Harris (HRS NYSE) and Alvarion (ALVR NASDAQ), a provider of wireless broadband connectivity.

"In addition, Radio Frequency Identification, or RFID, which are tags that emit radio signals and are used in manufacturing, have been adopted by the Defense Department and retailers such as Wal-Mart. As businesses increasingly adopt this technology, companies such as Koninklijke Philips Electronics (PHG NYSE), Texas Instruments (TXN NYSE), Manhattan Associates (MANH NASDAQ), Zebra Technologies (ZBRA NASDAQ), and Symbol Technologies (SBL NYSE) are potential beneficiaries."

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